PCS’s commitment to Sask.

BY LISA GOUDY


Deafening jeers filled the legislature during Question Period on Nov. 4. The Sask. Party and the Opposition NDP were at each other's throats about the Potash Corporation of Saskatchewan's pledge to the province and potash royalties. Speaker of the House Don Toth had to call the members to order 15 times during the discussion.


Only the day before, the federal government rejected BHP Billiton's US$38.6 billion hostile takeover bid of PCS. Industry Minister Tony Clement stated that the bid didn't provide a “net benefit” to Canada under the Investment Canada Act, but he did give BHP 30 days to review their options.


During that time frame, the Sask. Party is working towards ensuring that PCS keeps its pledge. The agreement is informal at this point but Premier Brad Wall said to reporters that he is confident that PCS will honour the agreement.


“I don’t have an expectation that they’re going to do anything but what they’ve pledged...but verification would come with potentially a more formal agreement,” said Wall.


NDP Opposition Leader Dwain Lingenfelter told journalists that the NDP plants to pressure the Sask. Party to get the pledge in writing. He believes that Saskatchewan needs to “raise the bar” for the net benefit of PCS so Clement cannot approve BHP’s next bid.


“I think that would make it much, much more difficult for this hostile takeover or any other hostile takeover that might be waiting in the wings,” said Lingenfelter.


The PCS pledge involves seven commitments to the people of the province, including moving the headquarters from Chicago to Saskatoon. During Question Period, the Sask. Party was on Lingenfelter's case about potash royalties. The Sask. Party believes that the current royalty structure works well and it shouldn't be changed.


“The argument that I make is that it doesn’t matter what the federal government’s doing. It’s our resource and we can control how much we take, the taxation level, the review of the royalties, which I think should happen now,” said Lingenfelter afterwards.


He contends that many people in Saskatchewan would like to get higher revenue for potash. The money could then be used to re-invest in potash or for health care or schools. Lingenfelter also suggested state ownership of the potash industry.


The Saskatchewan government predicted in its 2010-11 budget that potash royalties would produce $221 million, compared to an estimated $183.9 million in the 2009-10 budget, a 20 per cent increase. The total provincial revenue estimated for 2010-11 is $10.1 billion. Potash royalties are expected to generate one-fifth of oil and gas sectors of the economy.


Wall fiercely defended the present royalties, stating that they are beneficial to Saskatchewan and shouldn't be changed.


“I fundamentally disagree with Mr. Lingenfelter that what we want to do is mess with the royalties. We have made changes. We've made changes recently. The changes have got us to the point where there is an unprecedented expansion in the industry creating wealth and jobs for Saskatchewan people,” said Wall.